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Founders agreements are crucial for startups to prevent conflicts before they escalate into costly legal disputes. Often, founders approach lawyers only after disagreements arise, making resolution complex and expensive. A founders agreement should be established first, as it addresses the fluid nature of startups that often pivot before settling on a business direction, unlike a shareholders agreement which assumes defined roles and a fixed business path. Additionally, key performance indicators (KPIs) should be defined early, as many startups begin as side hustles and founders may contribute unevenly, leading to dissatisfaction. Establishing clear agreements upfront minimizes misunderstandings and supports future business growth.
